China Galaxy Securities has released a research report stating that on the supply side, the peak period for new polyester filament capacity additions has passed. Leading companies are flexibly adjusting their operating rates, resulting in orderly industry supply. On the demand side, downstream grey fabric inventories continue to decline, and raw material stockpiles for weaving are at relatively low levels. With expectations for demand orders to gradually follow up in the second half of the year, restocking momentum is anticipated. Furthermore, current disruptions in overseas supply chains and a partial easing of trade frictions for polyester filament exports are expected to maintain strong export momentum. Since the second quarter, the average price spreads for polyester filament POY and FDY have improved sequentially. The firm is optimistic about the industry's cyclical resilience and recommends monitoring Xinfengming (603225.SH), Tongkun Shares (601233.SH), and Hengyi Petrochemical (000703.SZ).

Peak Capacity Additions Concluded, Orderly Supply Under Industry Discipline

In recent years, supported by the "refining-chemical integration" strategies of leading private enterprises and domestic consumption and export demand, capacity in the PX-PTA-polyester chain has expanded significantly. Polyester filament, as a primary polyester product, has entered a period of capacity expansion. According to SCI data, China's polyester filament industry is set to add 3.03 million tons of new capacity in 2025. Planned additions for 2026 and 2027 are 1.65 million and 1.75 million tons per year respectively, representing a significant decline from previous peak levels. Concurrently, the industry has a solid foundation for self-discipline. Since Q2, influenced by conflicts in the Middle East, negative demand-side feedback has gradually emerged, prompting the industry to lower operating rates and flexibly control supply. As of June 11th, the weekly operating rate for China's polyester filament industry was 69.2%, down 10.9 percentage points year-on-year and at a low for the same period in nearly a decade. From January to May, China's polyester filament output was 18.17 million tons, a decrease of 1.9% year-on-year.

Downstream Inventories Remain Relatively Low, Positive on Restocking Momentum

From a medium to long-term perspective, global textile and apparel consumption is resilient and expected to grow steadily. From January to April, retail sales of clothing, footwear, hats, and textiles in China increased by 8.1% year-on-year. From January to May, China's cumulative export value of textiles and apparel grew by 0.1% year-on-year. Previously, affected by Middle East conflicts, the international crude oil price benchmark saw a sharp short-term increase, and price volatility remained high after crude reached elevated levels. This led to strong wait-and-see sentiment downstream, resulting in continuously declining grey fabric inventories, low raw material stockpiles for weaving, and persistently rising polyester filament inventories. This week, downstream weaving restocking demand showed slight release, easing inventory pressure on polyester filament. According to iFind data, raw material inventory days for terminal weaving this week were 11 days, an increase of 2.4 days week-on-week. SCI data shows that polyester filament factory inventory this week was 21.6 days, a decrease of 8.7 days week-on-week. The firm believes that as the geopolitical situation in the Middle East gradually clarifies and combined with the gradual placement of autumn/winter orders in the second half of the year, the weaving segment still possesses restocking momentum.

Partial Easing of Trade Frictions, Exports Remain Strong

Affected by Middle East conflicts, overseas supply chains have been disrupted, leading to a partial easing of trade frictions for polyester filament exports. On June 8th, Brazil's Executive Management Committee of the Foreign Trade Commission issued Resolution No. 910 of 2026, making an affirmative final anti-dumping determination on polyester filament yarn originating from China. The decision imposes anti-dumping duties ranging from $160.04 to $788.35 per ton, effective for five years. However, based on public interest considerations, the measure has been suspended. In 2025, China's polyester filament exports totaled 4.35 million tons, a year-on-year increase of 10.6%, accounting for 10.3% of apparent consumption. From January to April 2026, China's polyester filament exports reached 1.57 million tons, up 15.3% year-on-year. The firm believes that against the backdrop of partially easing export trade frictions, China's polyester filament, leveraging advantages such as stable supply and cost competitiveness, is expected to maintain strong export volume going forward.

Risk warnings include the risk of significant crude oil price volatility; the risk of a substantial increase in industry supply; the risk of a significant decline in textile and apparel demand; and the risk of intensifying international trade frictions.